Brian Zinchuk is editor and owner of Pipeline Online
CAPP president Tim McMillan at COP 26. Photo courtesy CAPP
CALGARY – Tim McMillan has led the Canadian Association of Petroleum Producers (CAPP) for seven years, a time period that precisely coincides with the longest downturn in the Canadian oilpatch in living memory. He is currently attending COP26, the United Nations Climate Change Conference UK 2021 in Glasgow, where he noted that in the past, much of the focus has been on coal and agriculture, not oil and gas, and especially not on Canadian oil and gas.
McMillan announced last week that he would be leaving the position of president of CAPP in the coming year.
Prior to joining CAPP, McMillan was Saskatchewan Minister Responsible for Energy and Resources and MLA for Lloydminster. He grew up on a farm half an hour north of Lashburn, and spent some time on service rigs during his younger days.
Pipeline Online spoke to McMillan at length on Nov 5, a day when CAPP jointly put out a discussion paper with similar industry associations around the world, promoting the global usage of natural gas. This is Part 2 of that interview, with Part 1, talking about simplistic solutions don’t work for complex energy problems, available here..
Pipeline Online: You’re leaving CAPP after seven years, arguably the most difficult period the oilpatch has seen in decades. Why now, when things are starting to turn around?
McMillan: I think a few reasons. The first is obviously very personal; the job as president of CAPP is one that has pace to it that I found challenging. When I took it on, I knew that I would probably have a timeframe where I was effective and fully engaged. And when I no longer felt like 100 per cent, I probably just be honest and step back.
So you know, after seven years, I’m the second longest president in the history of CAPP in the 30 years and within the organization, only one other president has served longer. And I think that, partly because we are coming into a time of economic recovery: prices are up, demand is up. We have pipelines that have come online with Line 3. Trans Mountain is under construction and should be online next year. LNG is under construction. So it’s like we, again, have a little wind in our sails and get on solid footing. It’s probably the right time for me step away and not a bad time for the country to reset as well as industry associations.
Pipeline Online: What will you be doing after this?
McMillan: My plan is to ensure that this is a professional transition that leaves the organization as strong as possible. I’ve committed to the board but I will support them and continue in the role and until they have somebody recruited, a transition that’s appropriate, so probably around six months. I’m going to take a bit of a break and hopefully start seeing some of the trees instead of just the forest. And I’m keen to get back, probably to support the energy industry again and I’m passionate about oil and gas. But Ihaven’t really decided.
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Pipeline Online: What do you see coming for the industry in the next ten years?
McMillan: We talked earlier that we’re on a better ground, as far as global price and demand, that we got some infrastructure that’s come online and more that’s under construction. So I think there’s a little bit of runway, but we should be, today, planning the pipeline that comes onstream 10 years from now. Because global demand for both oil and gas is growing, and Canada is the best producer in the world. Unfortunately, I’m not seeing that new projects coming forward, today that need to, if they’re going to be constructed a decade from now.
Global demand continues to grow. I think the bigger challenge for Canada is will, we be the supplier of choice, or will we be an increasing importer from dictatorships?
Pipeline Online: Many people are now treating oil and gas as both a pariah and as a sunset industry. Some have likened it to the tobacco industry. Do they have a point?
McMillan: People that are putting forward that point of view are the ones that I’m challenged with, that they often bring forward simplistic solutions to a complex energy and environment system. And though they may have catchy slogans, the results of that point of view and the solutions that they bring forward, are the devastating results that are playing in Asia and Europe right now.
When the energy system breaks down, the consequences can be extreme. So, I think our industry is up for environmental challenge, but we have to have good, stable policy that gets us the outcomes we’re looking for and enabled security.
Pipeline Online: Did you get tired of the fight?
McMillan: No.
I think what I liked about politics was that there can be differing points of views, and you can defend those points of views vociferously, and respectfully. Energy is very political. There’s political aspects to our industry that overlay pipelines and climate issues and different things. I think, after seven years, it’s probably the time for change.
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Pipeline Online: The past few months have seen an energy crisis start to sweep the world. Why do you think this is?
McMillan: We have through technology investments lived for the last several decades, in the Western World, in energy abundance. We have better diets. We utilized more fertilizer in agriculture. We have taken more vacations. Air travel has increased. Automobiles have increased. And the because of that abundance, I think we lost touch with the importance of energy policy. And we were vulnerable to very simplistic solutions to the complex issues around energy.
Ultimately, that’s okay, until it isn’t. And in Europe, they have shut nuclear power plants, coal-fired power plants, and haven’t built the redundancy into their system. Ultimately, it could end very badly for individuals.
Pipeline Online: With that energy crisis, we’re seeing the best prices for both oil and natural gas in many years. What does this mean for our industry?
McMillan: First and foremost, our industry has been challenged for the last seven years. A year and a half ago, we saw negative pricing and major damage done to the balance sheets of our companies. So, the first thing is to start to repair damage that has been done. And it enables companies to potentially grow to meet global demand. Demand and supply work very efficiently, if governments don’t disrupt it. And this response is responsible for more investment. I think the risk is that some of the policy items may shift that investment away from countries like Canada, to countries like Saudi Arabia and Nigeria and Venezuela.
Pipeline Online: With higher prices, why aren’t we seeing drilling activity picking up tremendously? What’s going on?
McMillan: I think we’re seeing companies that need to repair their balance sheets. We’re seeing shareholders have had a very difficult investment for years, looking to some return on that capital. But I think the bigger problem is the policy direction in some countries, like Canada, have made it difficult to invest in energy here. Activists have actually pursued divestment campaigns. And what that is doing is shifting investment to Russia, the Middle East, and other countries that don’t have the same pressure. I think we need to confront that head on, if we want to get the environmental, social and economic outcomes we’re looking for.
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